The Effectiveness of Audit Committee on Curbing Earnings Management Practices - pre and post - BCGC 2011: Further Look

The aim of this study is to provide the second evidence on the effectiveness of Bahraini corporate governance code (BCGC) 2011 on curbing earnings management practices. It’s my second study to measure the effectiveness of BCGC 2011. I used same study sample as in the first study, but in the current study the study period includes three study intervals; two years data (Pre- BCGC 2011) with one interval (i e. 2009, 2010) and four years data (Post- BCGC 2011) with two intervals (i e. 2012 and 2013; 2015 and 2016). The results of the regression model for the three study intervals show that earnings management does not significantly associated with any of the Audit Committee characteristics even pre- or post- BCGC 2011. However, in the two studies, the descriptive statistical test results show that, there is a clear evidence on the decrease of the level of earnings management practices after implementing the BCGC 2011. These results may provide new evidence that, Audit Committees by its own are not enough on curbing earnings management practices. Therefore, a future study is needed to examine the impact of BCGC 2011 on earnings management by using board characteristics in addition to Audit Committee characteristics in the regression model.